Regulation Best Interest – or Reg BI – is a landmark regulation that went into effect on June 30, 2020. This new regulation addresses broker-dealer business specifically, and will officially replace the industry’s long-standing, transactional “suitability” standard with a “best interest” standard for most business.
How does Reg BI impact my business?
Reg BI introduces a best interest standard that impacts process, forms and communication with clients, so it’s important that you understand the changes and how to implement them into your business.
What do I need to know, and where do I start?
ESI has provided training resources in multiple formats to help you get up-to-speed quickly. Below is a suggested training format:
- Find the Reg BI page on the NL website. The Reg BI page houses all the communications, training and reference materials associated with the Regulation. To reach the page, log in to the NL website. The Reg BI link is under ESI in the left column.
- Start with the mandatory training, available 24/7 in FIRE Solutions. This training provides a big picture overview of the Regulation. Note: The course must be completed by July 15, 2020.
- Review the Field Notices and recorded training. In addition to the mandatory training, ESI has been rolling out training webinars that provide information in short, easy-to-digest recordings. While the mandatory training provides a broader overview of Reg BI, the recorded trainings are topic and ESI-specific and will provide you with details pertaining specifically to our business process. Field Notices are included under the Communications dropdown. Recorded trainings are available under the Training Resources and Requirements dropdown.
Recorded training topics and Field Notices cover:- Overview and Introduction
- Rollovers
- Account Selection
- Reg BI Disclosure and Form CRS
- FIRE Solutions Mandatory Training
- Mutual Fund Cost Analysis
- No-Load Mutual Funds and Exchange-Traded Funds (ETFs)
- Sales Contest Incentives
- New Forms and Other Account Document Updates
- Form CRS Acknowledgement
- Reg BI Training specifically for Non-Registered Personnel
- Review the Forms Updates dropdown. Reg BI impacts several existing forms and has resulted in the creation of some new forms as well. The Forms Updates dropdown includes links to new and updated forms, as well as links to guides and recordings to help you navigate process changes. New guides and recordings include:
- Guide to Forms Updates – Summary of the changes to most transaction specific forms
- Regulation Best Interest Forms – Recorded Training
- Direct Business Forms Guide – Comprehensive guide to ESI forms for new direct business accounts
- ESI Additional Investment Documentation Requirement – Comprehensive guide to ESI forms for additional Investments
- Qualified Plan Rollover Guide – Overview of changes to the Qualified Plan Rollover Disclosure form
- Qualified Plan Rollovers and Reg BI – Recorded Training
- Financial Planning-Consulting and Purchase Disclosure Form Changes – Recorded Training
- Retail Brokerage and Illuminations Form Requirements Guide – Comprehensive document that breaks down new business paperwork requirements by Retirement/Non-Retirement accounts by product (Retail Brokerage and Illuminations business).
- Explicit Hold Memorandum Form Guide
- Explicit Hold Memorandum Form – Recorded training
Does Reg BI impact my existing clients?
On June 15th, ESI sent out our Annual Privacy mailing to all existing clients – both brokerage and direct – and included both the new Customer Relationship Summary (Form CRS) and our Regulation BI Disclosure. Sending these documents ensured that all clients received a copy of the new disclosure prior to the regulation’s effective date of June 30, allowing you to continue to provide recommendations on their existing accounts without having to deliver these documents yourself. This only applies to individuals who were clients of the Firm prior to June 30th. After June 30th, recommendations are subject to delivery criteria as explained in our training materials.
Questions? Contact ESI at 800-344-7437.
TC115488(0720)1